Instead of buying a group plan, you can reimburse employees tax-free for their own individual coverage — through an ICHRA or QSEHRA. These arrangements are growing fast, and for some businesses they're a great fit. But they're not always the best choice, and the trade-offs matter. Here's the honest picture.
Individual Coverage HRA. You set a monthly allowance; employees buy their own individual plan and you reimburse them tax-free. No company-size limit, no minimum contribution.
Qualified Small Employer HRA. Simpler, for businesses under 50 employees that don't offer a group plan. Has annual reimbursement caps set by the IRS.
You set a fixed allowance, so your costs are predictable — no surprise renewal spikes.
Employees pick the individual plan that fits them, rather than being limited to your group's options.
No group plan to manage, no participation requirements to meet.
Many sites push ICHRA hard because it's trendy — but it isn't always the best deal for your team. The big trade-off: with ICHRA/QSEHRA, employees are on individual plans, which have smaller networks than group plans. That means no access to providers like Stanford (which take group but not individual plans), and generally narrower networks.
There's also a subsidy wrinkle: offering an ICHRA that's deemed "affordable" can disqualify an employee from a Covered California premium subsidy. For lower-income employees who'd qualify for a big subsidy, that can actually leave them worse off. This is exactly the kind of nuance we walk through with you — sometimes ICHRA is perfect, sometimes a group plan with bigger networks is the better value. We'll tell you the truth, not push the trendy option.
It depends on your team and priorities. ICHRA shines when you want predictable costs, employee choice, and minimal admin — and your employees don't need the biggest networks. A group plan wins when network access matters (Stanford, BlueCard, ~1/3 bigger networks) and you want the simplicity of one plan. For many small and family businesses, the group route delivers better value at a similar cost. We compare both honestly for your situation — free. See Group vs Individual for more.
Here is a trick the payroll platforms will not tell you: we shop every major carrier at the Silver level to find who is priced best for your exact team — then set up employee choice so your people can pick their own plan and pay any difference pre-tax. You control the budget; they get the choice. Everyone wins.